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(4) Party A and Party B coordinate to provide information technology services for externalclients regarding system integration services, software development services, product sales anddistribution related services, operational maintenance services, and consultancy services in thePRC.(5) Prior to the date of this Agreement, Party A and the Listed Company, through their relevantsubsidiaries, have been providing Information Technology Service to external clients in China.Pursuant to basic principles and pricing principles provided in Article 4 and Article 5 of thisAgreement, Party A and the Listed Company, along with their relevant subsidiaries, agree to provideServices listed in Article 3.1 and Article 3.2 of this Agreement to each other.(6) Party A and its relevant subsidiaries, in day-to-day businesses, need relevant supportingServices provided by Party B and its relevant subsidiaries.(7) Party B and its relevant subsidiaries, in day-to-day businesses, need relevant supportingServices provided by Party A and its relevant subsidiaries.On equal and fair basis, both Party A and Party B agree to the following agreement after adequatenegotiation:1. DEFINITIONUnless otherwise provided or required, the following expressions have the meanings set forth below:“Listed Company” means China Netcom Group Corporation (Hong Kong) Limited, a company incorporatedand existing under laws of Hong Kong and listed on the Hong Kong Stock Exchange and the New YorkStock Exchange;“Services” means all kinds of services provided under Article 3 of this Agreement;“Service Receiver” means the Party and its relevant subsidiaries that receive the Services providedby Service Provider;“Market Price” means the price determined by the business operator and attained through marketcompetition. The market price shall be determined by the following order: (1) the price charged byany independent third party providing the same kind of services in the same or surrounding areaunder normal situation; or (2) the price charged by any independent third party providing the samekind of services within China under normal situation;“Service Provider” means the Party and its relevant subsidiaries that provide Services to theService Receiver;“State Price” means price set by the governmental pricing department or other related departmentsbased on the pricing limits and range under the Pricing Law of the People’s Republic of China;“Government Guidance Price” means price set by business operators following guidance provided bythe governmental pricing department or other related departments based on the pricing limits, basicprice range and its floating range under the Pricing law of the People’s Republic of China;“China” means People’s Republic of China, excluding Hong Kong, Macao, and Taiwan for the purpose ofthis Agreement;“Hong Kong” mans Hong Kong Special Administrative Region of People’s Republic of China; and
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“Listing Rules” means the securities listing rules of the Hong Kong Stock Exchange.2. SERVICES PROVISION AND RECEPTION2.1 Party A agrees to urge its relevant subsidiaries to provide relevant Services to Party B andits relevant subsidiaries pursuant to terms and conditions of this Agreement as the ServiceProvider. Party B agrees to urge its relevant subsidiaries to receive such Services pursuant to theterms and conditions of this Agreement. In the meantime, Party B agrees to urge its relevantsubsidiaries to provide relevant Services to Subsidiaries of Party B pursuant to the terms andconditions of this Agreement as Service Providers, and Party A agrees to urge its subsidiariesappointed by it to receive such Services pursuant to the terms and conditions of this Agreement asService Receivers. Both provision and reception of such services are non-exclusive.3. CONTENTS OF THE SERVICES3.1 Under this Agreement, Party A and its relevant subsidiaries shall provide the followingServices as Service Providers:3.1.1 Construction and Installation Supporting ServicesConstruction and Installation Supporting Services include, but not limited to, providing projectplanning and designing, exploration, construction, supervision and testing services according toindividual requirement, and installing cables, cabinets, network cabling, terminal equipments,technology business supporting system, system maintenance, and the entire service process formeeting certain usage requirements.3.2 Under this Agreement, Party B and its relevant subsidiaries shall provide the followingServices as Service Providers:3.2.1 System Integration ServicesIncluding, but not limited to, the entire service process of integrating software, hardware andnetwork by certain functions and usage requirements for purpose of realizing certain functions andmeeting certain usage requirements according to individual requirements. The contents of systemintegration services include, but not limited to, designing, installation and collocation, projectconstruction, installation and collocation of supporting software, network adjustment and testing,system joint adjustment, and application development.3.2.2 Software DevelopmentIncluding, but not limited to, the entire service process of developing certain applicationsoftware by using basic operating system, data room and development tools for purpose of realizingcertain functions and meeting certain usage requirements according to individual requirements.3.2.3 Product Sales and Distribution Related ServicesIncluding the sale of software products and all kinds of hardware equipment products produced by athird party to Party A or its relevant subsidiaries.3.2.4 Operational Maintenance Services
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Including, but not limited to, providing maintenance and relevant consultancy services regardingthe structure, process, software and hardware of the IT system, and maintenance of all kinds ofnetwork system and business platforms.3.2.5 Consultancy ServicesIncluding, but not limited to, providing project research and development services, providingsolutions for information systems and communication systems, etc., and providing evaluation andtesting services for all kinds of software and hardware products, and platforms and systems.3.2.6 Leasing ServicesIncluding, but not limited to, providing leasing services regarding network, equipments andapplication systems according to individual requirements.4. BASIC PRINCIPLES4.1 For the Services provided by the Service Provider to the Service Receiver under thisAgreement, the Service Provider reserves the right to charge reasonable service fees under theterms of this Agreement. The Service Receiver shall make the payment for the Services rendered.4.2 The terms of Services offered by the Service Provider under this Agreement shall not be worsethan the same or similar services it offers to any other third party.4.3 Services provided under this Agreement shall meet the standards required by the State, ifapplicable.4.4 Under conditions of not violating the State’s prohibitive regulations, the Service Providermay entrust a third party, including its subsidiaries, affiliates and related companies, to providecertain specific Services under this Agreement to the Service Receiver on behalf of the ServiceProvider. However, the Service Provider shall ensure that such third party has the requiredqualifications required by the State, that the Service standard provided by such third party is notworsen than the standard undertaken by it, and that it takes ultimate and all the responsibilitiesfor all the obligations therefore raised.4.5 In the event of any breach of this Agreement by either Party that leads to any damagesuffered by the other Party, the Party in breach shall be liable for all immediate and full damagesfor breaching this Agreement. However, In the event of Force Majeure that causes both Parties oreither Party to fail completely or partially in performing the obligations under this Agreement,that said Party is not liable for breach of agreement.4.6 Both Parties shall provide all reasonable and essential assistance to the other Party for thepurpose of fulfilling the obligations set out in this Agreement.4.7 Under conditions of compliance of this Agreement, the relevant subsidiaries of Party A andParty B may sign specific execution documents regarding the provision of certain Services withintheir authorized scope, and may agree on the specific content, standard, scope, method, or anyother specific requirement of the Services. But such agreement shall not go beyond the content ofthis Agreement and shall not have any conflict with this Agreement.5. PRICING PRINCIPLE5.1 The pricing or charging standard under this Agreement shall be governed by the principle inthis provision and in the following order: those that are fixed by the State shall follow theGovernment-Fixed
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Price; those that have the Government Guidance Price shall follow the said guidance price; thosethat have no fixed price nor government guidance price yet have a Market Price shall follow theMarket Price.5.2 Party A and Party B agrees that if the Market Price is followed due to lack of fixed price orgovernment guidance price, when the contract value of any construction, installation and supportingservices provided by Party A and its relevant subsidiaries to Party B and its relevant subsidiariesexceeds RMB 300 thousand yuan, a bidding process must be conducted to settle the price, which meansthat the pricing basis is to settle the price by holding a publicly bidding event in accordancewith the Bidding Law of People’s Republic of China.5.3 Party A and Party B agree that if the Market Price is followed due to lack of fixed price orgovernment guidance price, when the contract value of any system integration, software development,operational maintenance, consultancy and leasing services provided by Party B and its relevantsubsidiaries to Party A and its relevant subsidiaries exceeds RMB 500 thousand yuan, or thecontract value of any single product sales and distribution related services exceeds RMB 2 millionyuan, a bidding process must be conducted to settle the price, which means that the pricing basisis to settle the price by holding a publicly bidding event in accordance with the Bidding Law ofPeople’s Republic of China.5.4 Under conditions of not violating the laws of China, for the same kind of Services, if anindependent third party cannot offer better conditions and terms to the other Party, one Party havepreferential right to use the Services from the other Party.5.5 Both Parties will sign the specific execution documents separately if one Party of thisAgreement is successful in the bidding, and such execution documents must carry the terms regardingspecific services needed, as well as the binding principles, terms and conditions.5.6 The specific amount of service charge agreed upon under this Agreement shall from time totime be calculated by the accounting principles applicable in China (if applicable).5.7 Both Parties shall, before December 31 of every calendar year, conduct a review on the priceof every item of services and facilities stated in this Agreement for the next accounting year (ifnecessary).6. PAYMENT OF SERVICE CHARGE6.1 The Service Receiver shall, based on the provisions of this Agreement, any supplementaryagreement of this Agreement (if any), and in specific execution documents, pay the Service Providerservice charge in consideration for the Services provided by the Service Provider.6.2 If the Service Receiver fails to pay on time the said service charge agreed upon under theprovisions of this Agreement, any supplementary agreement of this Agreement (if any), and thespecific execution documents, the Service Receiver shall, for each 1 day (calendar day, and thesame applies below) late, pay a late charge penalty of 0.05% of the outstanding balance to theService Provider; and after 60 days of late payment, the Service Provider is entitled to notify theService Receiver the termination of Services; if the Service Receiver still fails to pay for theoutstanding balance upon 30 days after receiving the written notice to terminate Services, theService Provider shall be entitled to terminate the Services immediately. The suspension ortermination of such Services shall not in any way prejudice or affect the rights and obligationsunder this Agreement prior to such event.7. REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS7.1 Each Party represents, warrants and undertakes to the other Party that this Agreement islegitimate, effective, and equally binding on both Parties.
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7.2 Each Party of this Agreement warrants and undertakes to the other Party that:(1) It is an independent legal person existing in accordance with the laws of China, and have thepower and authority (including but not limited to any approval, consents or permission granted bythe government departments to enter into and perform this Agreement);(2) No provision in this Agreement violates the constitutive documents or the laws andregulations of China;(3) It will use its best endeavors to take all necessary and procure appropriate or advantageousmeasures to perform its obligations under this Agreement and to make this Agreement effective inaccordance with the laws and regulations of China and the terms of this Agreement.7.3 Party A and Party B each warrants to the other Party that its relevant subsidiaries haveagreed to execute this Agreement as Service Receiver and Service Provider respectively from theeffective date of this Agreement.7.4 Party A and Party B each warrants to the other Party that its relevant subsidiaries whoprovide Services have all the qualifications and licenses that are required by the State’ssupervision authorities, and that such qualifications and licenses are continuously effectivewithin the term of this Agreement.7.5 Party A and Party B each warrants to the other Party that its relevant subsidiaries whoprovide Services hire qualified, highly experienced, and professional employees, and that thenumber and skills of such employees meet the needs under this Agreement.7.6 Party A and Party B each warrants to the other Party that employees of its relevantsubsidiaries who provide Services are able to receive sufficient guidelines and instructionsregarding such Services under this Agreement, have reasonable care and technology to meet thestandard required by the other Party, and will not cause damage to the Service Receiver because ofemployees’ behaviors.7.7 Party A and Party B each warrants to the other Party that its relevant subsidiaries willreceive Services provided by the other Party (and its subsidiaries), provide necessary conditionsand assistance, and will not cause damage to the Service Receiver because of employees’ behaviors.7.8 It is agreed that both Parties will take further actions to ensure the realization of theprinciples and provisions in this Agreement. It is further agreed that both Parties will ensurethat, Party B, being a subsidiary of Listed Company, shall comply with the Listing Rules of theHong Kong Stock Exchange for connected transactions.8. TERM8.1 This Agreement shall come into effect from January 1, 2008 to December 31, 2010. If agreed byboth Parties, this Agreement shall be renewed automatically for another 3 years on the same terms.There is no limit on the number of renewal.8.2 Both Parties agrees that from the date on which this Agreement takes effect, the InformationCommunication Technology Agreement executed by both Parties on November 7, 2006 will be terminatedand replaced by this Agreement.9. FORCE MAJEURE
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9.1 In the event of Force Majeure that causes both Parties or either Party to fail completely orpartially in performing the obligations under this Agreement, that said Party is not liable forbreach of agreement. However, in the event of such an incident, the affected Party shall inform theother Party by written notice within fifteen (15) days after the said incident and provide relevantproof and evidence to the other Party. At the same time, the affected Party shall use its bestendeavors to minimize the damage caused by the Force Majeure event. The affected Party or bothParties shall resume its obligations under this Agreement within a reasonable time once the ForceMajeure event has ended.9.2 Force Majeure in this Agreement means all objective situations that are unforeseeable,unavoidable and that cannot be overcome.10. CONFIDENTIALITY10.1 Unless with written approval by the other Party, neither Party can announce nor supply orreveal to any third Party any information regarding this Agreement or the business information ofthe other Party, with the exception of requests by the legal or governmental departments or anyother relevant securities regulatory authorities or for the purpose of the Listing Company seekinglisting or retaining listing.11. TRANSFER OF RIGHTS AND OBLIGATIONS11.1 Unless otherwise specified by Article 4.4 of this Agreement, without the written approval ofthe other Party, neither Party may transfer any single right and obligation as agreed upon underthis Agreement.12. NON-WAIVER12.1 Unless otherwise specified by law, the failure or delay of exercising the right, power orprivilege as endowed by this Agreement on the part of any Party cannot be deemed as the waiver ofsuch rights, power or privileges. Besides, the partial exercise of such rights, power or privilegesshould not hinder the exercise of such rights, power or privileges of this Party in the future.13. NOTICE13.1 All notices required to be delivered pursuant to this Agreement shall be in writing, anddelivered to the address as stated at the beginning part of this Agreement, or to addresses orfacsimile numbers designated by one Party to the other Parties in writing from time to time.13.2 Any notice shall be delivered either by hand, registered mail, or facsimile. Any notice shallbe deemed to have been delivered at the time of actual receipt if delivered by hand; three daysafter the date of return receipt if delivered by registered mail; and at the time of transmissionif delivered by facsimile.14. GOVERNING LAW AND DISPUTE RESOLUTION14.1 This Agreement shall be governed, interpreted, and executed in accordance with the laws ofChina.14.2 In case of disputes as to the power, interpretation or implementation of this Agreement,both Parties shall seek to settle the matters of dispute by friendly negotiation. If the matters ofdispute cannot be settled by negotiation within thirty (30) days from the day the matters ofdispute arise, either Party has the right to resort to litigation at the people’s court which hasjurisdiction over such Party.15. EFFECTIVENESS AND MISCELLANEOUS
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15.1 This Agreement will come into effect upon signed and sealed by the legal representatives orauthorized representatives of both Parties.15.2 This Agreement may be made in several copies and executed by each Party separately, whichtogether form an effective Agreement. If this Agreement is signed on copies, the date on which eachParty successfully exchange the signed copy by facsimile is considered the signing date.15.3 Under condition where the Listed Company meets the supervision requirements on related partytransaction provided by Listing Rules, this Agreement may be amended or supplemented as agreed byboth Parties. All such amendments or supplements shall come into effect only when executed orsealed by the legal representative or authorized representative of both Parties.15.4 This Agreement is severable, that is, if any provision of this Agreement is held to be void,illegal, or unenforceable at any time, the effectiveness and performance of other provisions ofthis Agreement shall not be affected.15.5 This Agreement is made into four (4) duplicate originals. Each party holds two (2) copies,and each copy shall have the same legal binding effect.IN WITNESS WHEREOF, the legal representatives or authorized representatives of the both Partieshereto have executed this Agreement as of the date and venue first written above.**Signature Page**     **PARTY A: CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (SEAL)**